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Melanion Capital’s crypto ETF is the worst-performing ETF in 2022, plummeting 68% since the start of the year. Melanion BTC Equities Universe is one of the five crypto funds that account for the worst seven debuts in the history of the ETF market, according to Financial Times.
5 Crypto ETFs Account for 7 Worst-Ever ETF Debuts
Paris-based Melanion BTC Equities Universe is the worst-performing crypto exchange-traded fund (ETF) in 2022, according to Morningstar Direct data. The ETF is down more than 68% year-to-date and almost 77% since its launch in October 2021.
Butt Melanion Capital’s fund is just one of the five crypto ETFs that accounted for the seven worst ETF debuts ever. All five crypto funds were launched in 2021, a booming year for crypto assets.
“Specialised ETFs are launched just after the very peak of excitement around popular investment themes. Over the years following the launch, the underlying assets shed some of their initial overvaluation, and so do the prices of specialised ETFs.”
– Rabih Moussawi, associate professor of finance at Villanova University in Pennsylvania.
Similarly, the acclaimed ProShares Bitcoin Strategy ETF also had a woeful first year since its October 2021 debut, losing a record $1.2 billion of investor’s money in the past 12 months. The ETF plunged over 70% during that period.
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Crypto Mining Crunch Contributed to ETF Losses
While crypto ETF losses are substantial, they shouldn’t come as a surprise given the unprecedented sell-off in the broader crypto market. The ETFs were launched just before Bitcoin and Ethereum recorded their all-time highs, only to lose more than 70% of their value over the subsequent 12 months.
The crypto downturn was sparked by a tough macroeconomic environment involving 4-decade high inflation and aggressive interest rate hikes, weighing on risk assets while boosting the US dollar. The sell-off was exacerbated following the crash of TerraUSD and LUNA in May, with the pair losing over $60 billion in combined value after the collapse.
Additionally, Melanion’s ETF’s loss comes in part due to its exposure to crypto miners Marathon Digital Holdings and Riot Blockchain. The two crypto-mining companies have plummeted more than 58% and 69% since the start of 2022, respectively.
However, Morningstar’s historical data indicates that a bad debut year does not affect ETFs’ long-term prospects significantly. For instance, the SPDR Portfolio S&P 500 Growth ETF plunged by over 52% following its 2000 launch but is currently worth $12.2 billion.
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